[/floatr]Economist: The Japan syndromeTHE noodle bowl of free-trade agreements (FTAs) in Asia is about to get more tangled. In the past week alone, South Korea began FTA negotiations with the European Union, having struck a deal with the United States in early April...Japan has been jolted by the FTA between America and South Korea. The deal, which has yet to be ratified, would open South Korea to American agriculture exports and investment, while South Korean cars and consumer electronics would go more freely to America. Japan sells much the same kind of things to America, as well as luxury foods to South Korea. So although some officials gloss over the effect on Japan (they argue that a thriving South Korea sucks in Japanese goods), this FTA will increase the competition faced by Japanese exporters in both America and South Korea...On May 9th private-sector members of the Council on Economic and Fiscal Policy urged the government of Shinzo Abe to instigate free-trade talks with America, followed by the EU...But the biggest problem is Japan's coddled farmers. South Korea's new prime minister, Han Duck-soo, recently emphasised that for any bilateral pact to work, Japan would have to open up nine-tenths of its farm trade. Japan now applies tariffs of nearly 800% to all but a tiny amount of imported rice. Japanese officials think no deal, even with America, would be incentive enough for the government to take on the farm lobby, particularly before upper-house elections in July...more...
